Personal Finance

A Look at Amish Finances

Comments 4 Comments

Amish people don't carry health insurance. Instead, they contribute money to a community fund that can be tapped into during times of need.

This is just one of many interesting facts that I learned from reading Amanda L. Grossman's article about Amish finances in the Houston Chronicle. Grossman grew up in Lancaster County, PA, the "heart of Amish country," and her father often worked for their Amish neighbors as a driver. (Amish people don't allow themselves to drive automobiles, but they sometimes hire drivers to take them to the doctor or other places that are too far to go by horse-and-buggy.) Grossman got much of her information for the article by interviewing her father, who became friends with several Amish families as a result of working for them from time-to-time.

Grossman was interested in finding out how it was possible that the Amish, who don't use electricity and shun many modern conveniences, are able to own large, well-maintained houses surrounded by plenty of farmland. Among other reasons, she learned that when Amish children get part-time jobs (learning valuable trades and living at home to help the family with farm chores), they hand over their paychecks to their parents, who save 90 percent of it. When the children turn 21, the parents return the money to them as a lump sum. This sizable nest egg gives them a good head start in life as independent adults. Grossman compares this to her own financial situation at age 21 — being in her third year of college, "having racked up considerable student
loan debt," and living miles from home.

My children are too young to have part-time jobs, but when they get them, I'd like to develop a similar savings plan for them.

Don't miss the rest of the article, as there are lots of other nuggets of wisdom there that you may be able to incorporate into your own financial planning.

Mark Frauenfelder – Editor-in-chief of MAKE magazine and the founder of the popular Boing Boing weblog, Mark was an editor at Wired from 1993-1998 and is the founding editor of Wired Online.

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  • http://314chan.co.nr/ 3.14chan

    Interesting…
    I like this part of their culture (but not the no tech life)

  • Michael

    How is ‘contribute money to a community fund that can be tapped in times of need’ not just a simple definition of insurance?

  • http://profile.typepad.com/6p01156f719fbf970c tangobozo

    I wonder if running a puppy mill counts as a part time job.

  • HikingStick

    3.14chan, while “insurance” can mean any means of hedging against a loss, it is most often viewed as a specific legal contract in which one party pays premiums so as to receive benefits when certain conditions are met. Since modern insurance companies exist primarily to serve the financial interests of the stakeholders (e.g., profits for shareholders), it is in their best interest to try to limit the number of allowed claims against the system. In the case of a shared-burden or community fund such as that held by the Amish, there are likely no contracts, and no set monthly premiums (it’s more likely that each family is expected to contribute a percentage of their income). In case of a loss in a community like the Amish community, much of the support that comes afterwards comes directly from the community beyond those community funds. For example, in the event of a fire, the community will likely provide shelter, food, and clothing for the affected persons without regard to the community fund, whereas such items often need to be made as claims against an insurance policy in the non-Amish Western world. The funds for the reconstruction of the home would likely come out of the community fund–similar to the way an insurance payout should cover such a loss, but the community fund will not likely care about depreciation. Also, I think it is unlikely that the Amish community would make a member inelligible for help if there are multiple requests for aid during a given time. Most insurance companies include clauses that allow them to drop your coverage if you have too many claims in any period of time. My homeowner’s policy, for example, allows no more than three claims in a three-year period. If I go beyond that, they may immediately cancel my policy and I am not eligible to claim any further benefits.

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